Most of the job losses will take effect by May 1, while most remaining US staff will see pay cuts of between 3 and 7 per cent for the year while executive pay would be cut by 10 per cent, GM said.

"These difficult actions are necessitated by a severe drop in vehicle sales worldwide and by the need to restructure GM for long-term viability"

GM statement

The job and pay cuts come in addition to buyout offers for GM's 62,000 union workers.

"These difficult actions are necessitated by a severe drop in vehicle sales worldwide and by the need to restructure GM for long-term viability," GM said in a statement.

GM's sales in January plunged 49 per cent and the firm has said it expects overall US sales to be near 10.5 million vehicles in 2009, extending a four-year slump that has taken the market to levels not seen since the early 1980s.

GM's rival Chrysler, which also received $4bn in government loans and is seeking an additional $3bn, is currently offering buyouts to its US hourly work force after cutting more than 8,000 salaried jobs in 2008.

GM, Chrysler and Ford, the "big three" of the US motor industry, have shed about 140,000 jobs since 2005 and almost half of their workforce since the start of the decade.